03.08.2026 Regulation #USA #Import #Duties
US applies Section 338 for the first time: 50% duty on Canadian goods Aug 19
On July 20, 2026, the Trump administration signed three proclamations imposing an additional 50% ad valorem duty on Canadian motor vehicles, alcoholic beverages and dairy products. The tariff takes effect on August 19, 2026, at 12:01 a.m. Eastern Time and applies to goods entered or withdrawn from warehouse for consumption on or after that date, regardless of USMCA origin status. As Holland & Knight notes, this marks the first time in history Section 338 of the Tariff Act of 1930 has been used to impose tariffs.
Legal basis and scope
Section 338 authorizes the president to impose new or additional duties — potentially exceeding normal rates — against countries that discriminate against U.S. commerce. As C.H. Robinson points out, unlike other recent tariff actions, duties issued under Section 338 are not time-limited.
Each proclamation carries its own annex of HTSUS classifications and Chapter 99 modifications: 9903.02.12 for alcoholic beverages, 9903.03.13 for dairy, and 9903.03.14 for motor vehicles, per the same C.H. Robinson advisory. According to Crane Worldwide Logistics, total exposure is nearly $20 billion of Canadian imports. Per the White House fact sheet, the products range "from wine to hockey sticks to cement," since the motor-vehicle proclamation also sweeps in unrelated goods — agricultural products, textiles, wood, furniture, printed circuit boards. The dairy proclamation covers roughly 52 tariff lines, including milk, whey, lactose and casein (Holland & Knight).
The stated rationale is discrimination against U.S. exporters: Canada's 25% surtax on U.S.-origin vehicles, provincial liquor boards' halt on purchasing U.S. alcohol since March 2025 (U.S. exports fell 81%, or $582 million, for March 2025–February 2026 versus the prior year, per the White House), and Canada's dairy tariff-rate quota terms, which favor EU suppliers under CETA over U.S. ones. U.S. vehicle exports to Canada dropped roughly 22% ($5.6 billion) for the April 2025–March 2026 period, the same source states.
What it means for importers
The duty stacks on top of all existing duties, taxes and fees and carries no USMCA carve-out, as confirmed by both C.H. Robinson and GHY International. Importers using foreign-trade zones must admit covered merchandise in "privileged foreign status" from the effective date onward, locking in the duty rate at the time of admission rather than withdrawal.
Exclusions cover energy products, potash, goods already subject to Section 232 duties (steel, aluminum, copper, certain vehicles and parts), civil aircraft under the WTO Civil Aircraft Agreement, fish and critical minerals.
Transition period and risks
Trade counsel, including Holland & Knight, expect litigation in the Court of International Trade, since no prior precedent exists for using Section 338 to impose tariffs, leaving the legal basis open to challenge. From August 19, importers bringing in goods listed in the proclamations' annexes will owe the additional 50% duty on top of existing rates and fees, regardless of how any court challenges are eventually resolved.
Primary sources
- Holland & Knight: 50% Opening Bid — Canadian Imports Subject to Section 338 Tariffs
- GHY International: US Imposes 50% Section 338 Tariffs on Canadian Imports
- C.H. Robinson: New 50% Section 338 Duties on Select Canadian Products
- Crane Worldwide Logistics: New Section 338 Tariffs Add 50% Duties on Certain Canadian Imports
- The White House: Fact Sheet — President Trump Imposes Additional Tariffs on Canada
Mentioned codes
This material is for information only and does not constitute legal advice or customs consulting. Verify changes against the primary sources before acting.